NAH to spend £1.7m on restructuring PI operation in response to whiplash reforms

National Accident Helpline is to invest £1.7m over the next year so as to accelerate changes to its operating model that will enable it to respond to the government’s proposed personal injury reforms.

The network’s AIM-listed holding company told the London Stock Exchange today that NAH’s profits would be hit in the short term and its share price took a significant hit as a result, falling 17% to 160p. They were 225p the day before the government announced on 17 November.

The group announced in September that it had begun a limited trial of a new business model which involves NAH playing “a more proactive role in the entire conduct and financing of a PI case”. This is now to be speeded up.

It told investors: “Whilst the measures proposed within the Ministry of Justice’s consultation are consistent with the group’s expectations, discussions with panel law firms has led the board to believe it would be prudent to accelerate investment in cases under these alternative commercial and structural arrangements.

“This will mean committing further investment during 2017 and will also result in a deferment of profit and cash flow. The board anticipates a reduction in 2017 operating profit compared with its previous expectations in NAH of approximately £4m, which should be returned over future years as cases settle. It is anticipated that such investment will be a continuing feature of NAH’s business model.”

It is to put in £1.7m by the end of 2017 – of which £500,000 will be spent by the end of this month – “to ensure its brand positioning and processes are aligned to the requirements of the new regulatory environment”.

The initial outlay would be offset “by an exceptional credit of approximately £1m in 2016 related to the resolution of cases covered by pre-LASPO ATE insurance provisions, relating to the period prior to March 2013”.

The statement concluded: “The longer-term impact of the regulatory changes will be contingent on the outcome of the Ministry of Justice’s response to the consultation, which is due to be published in April 2017.

“The board believes that the actions it has taken and now intends to accelerate will enable NAH to maintain its position as the leading provider of access to justice for those seeking redress under any new regulatory regime.

Legal Futures Blog

Last month, MPs on the justice select committee asked minister Lord Keen what would happen when the government went ahead with its plan to raise the small claims limit for personal injury claims (from £1,000 to £5,000 for road traffic related claims and to £2,000 for everything else). As it is a jurisdiction in which lawyers do not generally operate – because legal costs are not recoverable – who might help claimants navigate what can still be a complex process? His answer, surprisingly, was claims management companies.